The issue of this question is on the remuneration and compensation of directors and chief

executive officers. A company will reward an employee that brings profits. However, in recent
times we have seen that companies will engage in unethical practices to gain short-term profits,

Example VolksWagen (2009-20017). This act will ensure that the director or a CEO is paid a high
sum for the rewards given to the company.

The issue is not so much of a high pay but the negative corporate culture which includes
deception to make quick money.

There are 4 factors to consider:

1. How do we address the imbalance between employee and executive pay?

a. Make reference to Cadbury Report
b. Greenbury Report
c. Turnbull Report
d. Higgs Review
2. What is the role of the remuneration committee.
a. Look at the recent example of Plus 500, an online trading company which angered
shareholders by increasing the pay of bosses and finance chief of more than 4.1
million pounds. A share holder meeting was called on 21st Jan 2019 to vote on
changes concerning this policy
3. Can shareholders reject remuneration of executive and directors?
a. The number of shareholder revokes has increased since 2017. According to Big
Four Frim Deloitte of the top UK 30 Companies, 22% received less than 80%
support for their remuneration reports. Up to 6% last year.
b. According to Stephen Cahrl, despite a quieter AGM last year, a 2018 season has
shown the executive pay remains an area of shareholder interest. We have seen
a much more challenging voting in particular for FTSE 30 companies despite it not
 being a policy year for the majority. This reflects a tougher stand taken from proxy
agencies in respect of the larger companies as well as continued pressure on
repeated offenders. This is from the vice chairman of Deloitte.
4. What are the relevant director’s duties concerning remuneration?
a. The department of business enterprise and industrial strategies for GC 100 to
produce the document as of part of a wider series of measures taken by the Gov
to improve the UK corporate governance framework. Guidance on directors duties
S. 172 and stakeholder consideration was issued on 23rd Oct 2018
5. What are the relevant laws in relation to executive remuneration?
a. Effective from 1st Jan 2019, the updated corporate governance code places an
increased emphasis on companies purpose and values as drivers of corporate
governance. It requires all large companies to report on how directors take
employee and other stakeholder interest into account.
It gives the UK largest publicly listed companies the deadline of 1st Jan 2020 to
publish the ratio between CEO and the average worker.

Look at S. 172 on employees interest.